Baby Bells Ask Court to Void New FCC Rules
SBC Communications Inc., Verizon Communications Inc. and other local telephone companies Thursday asked a court to overturn new federal rules that give states more authority to decide whether the carriers must lease network components to rivals at discounts.
SBC, BellSouth Corp., Qwest Communications International Inc. and the United States Telecom Assn., which represents local carriers, filed the petition with the U.S. Court of Appeals in Washington a week after the Federal Communications Commission issued the final version of the rules.
Verizon, the nation’s biggest local phone company, separately filed a similar petition with the court.
The companies, excluding Verizon, said the regulations maintain a system that costs them as much as $180 million a month as competitors take away millions of customers.
Consumer groups and newer local-calling sellers such as AT&T; Corp., which rent incumbent carriers’ network switches and other components, say the rules foster lower prices and more competition.
The petition is the Baby Bell regional phone companies’ “best shot at getting the answer they want, but it’s still not likely,” said Scott Cleland, chief executive of investment research firm Precursor Group.
Under the new rules, the FCC gave states authority to decide whether discount leasing should be continued in individual cities. The Baby Bells want a quick end to the leasing, but most state regulators support the arrangement.
The National Assn. of Regulatory Utility Commissioners, which represents state regulators, said it would oppose the court challenge.
In the filing, SBC said the leasing rules had cost the company $1.6 billion in sales and would cost it $9 billion in the next four years.
BellSouth said it had lost 2 million local lines and $670 million, and Qwest said it had lost $413 million.
Verizon said it would lose 1.8 million customers and about $1 billion over the next year unless the rules are changed.
Shares of SBC, California’s dominant local phone company, rose 10 cents to $22.80 on the New York Stock Exchange. Verizon shares gained 53 cents to $35.60, BellSouth dropped 8 cents to $25.31 and Qwest edged up 1 cent to $4.42. They all trade on the NYSE.
